3 must-haves for India to chart its own transformational growth journey

 As my first in post in year 2022, I decided to lay my idea on the fundamentals that India need to revisit in order to have a strong growth trajectory. However, this post does not try to slice and dice the economic data. Instead, it attempts to revisit the foundation that needs to be addressed to make growth an inherent process, more than an objective.

So, here are my 3 must-haves for India to chart a transformational journey

1)     Address the ‘Brain-Drain’ issue:

 One of the key issues that needs resolution is the brain-drain problem. Graduates from leading institutes settle abroad, looking for better education, good employment opportunities and high salaries. As per Global Wealth Migration Review, 2% of high-net worth individuals settled abroad in 2020. This dynamic creates worrying levels of vacuum of quality talent in India. There are few advantages as well as India observes strong flow of remittances (USD 87 billion) in 2021. However, the cons clearly outweigh the pros in this scenario

As a solution to this issue, India needs to explore options to create equal and strong educational frameworks that create nationwide skilling movement. It is imperative to focus on bridging gaps between academia and corporates by identifying relevant skills for today. With good opportunities opening up, we can see a decline in the brain drain activity in subsequent years.

2)     Foster Innovation:

India jumped two positions in Global Innovation Index prepared by World Intellectual Property Organization (WIPO) in 2020. Currently, India stands at 46^th position on this index. However, there are still significant degrees of freedom to build up on India’s innovation capabilities. Currently, the total patents filed in 2020 stood at 37,880 which is up from 15,914 back in 2011. This showcases strong push by Indian government and companies to bring new ideas to the growth story. However, breakthrough innovations at grassroot level sometimes go unnoticed with this patent filing mechanism. It is up to the government to tap into this so as to explore newer possibilities to its fullest depth. In this regard, the corporate and academia should be empowered to support India’s rural core by providing funding, technical know-how, marketing, branding and patent filing avenues to ensure that these innovations appear on radar going forward.

3)     Imbibing principles from India’s ancient heritage:  

This point may seem a little off-track given the fact that we are discussing on ways to grow economically. Believe it or not, India’s spiritual heritage is replete with principles on how to manifest abundance, growth, peace and harmony. In the age of dynamic change, it is important for us to imbibe principles which can give us required clarity and strength to work towards our growth. The new way of life can help us to navigate the complexities with fluidity and work to achieve the larger purpose.

 

With this, I will conclude by saying that India’s economic goals cannot be achieved without strong and focused individual contributors and thus it is necessary to nurture and develop talent across all levels.

 

Thanks to Tata Group, Air India finally gets their old pilot back

 

Struggle to find a buyer comes to an end

1)     Air India arrived in Tata Sons’ cockpit after relentless struggle by Indian Government spanning two decades to find a suitable buyer for distressed airline. For strategic disinvestment, the Government had reserved the ask price to be around 12,906 crores. Tata Sons bid price came to be around INR 18,000 crore, successful overpowering the bid by SpiceJet’s Ajay Singh for INR 15,100 crore.

2)     Tata Sons will now have 100% ownership in Air India along with complete stake in Air India Express (Air India’s international low-cost arm) and 50% stake in the ground handling joint venture. Further, Tata Sons will also own brands like Indian Airlines and Maharajah.

3)     Of INR 18,000 crores bid by Tata, 15,300 crores will be Air India’s debt component taken by Tata. Remaining 2,700 will be the cash paid to the government. 44,000 crores of remaining debt in Air India will be transferred to a special-purpose vehicle (SPV)

The Timeline

1)     The airline was bleeding cash since its merger with Indian airlines back in 2007 amounting to loss of INR 20 crore per day. With this, gradually, Air India started reeling under a mountain of debt amounting to INR 60,000 crore (2020)

2)     In 2019, Indian Government issued a de-facto approval for creation of SPV named Air India Assets Holding Ltd. Furthermore, they had decided to transfer the INR 29,464 crore of total 43,000 crore debt (2019) to the SPV. This led to 90% of total debt being government-guaranteed.

3)     Air India faced enormous turbulence since the initial decision by government to opt for a stake sale. In 2000, NDA Government led by Atal Bihari Vajpayee tried to sell a minority stake of 40%. However, rising resistance for privatization by trade unions led to this plan coming to an abrupt halt.

4)     Eventually, NDA Government hiked the stake sale to 76% in 2018 and to 100% in 2020, further inviting expression of interest from potential bidders

5)     Furthermore, in October 2020, Government relaxed limitations for buyers, providing them the discretion to fix the amount of Air India’s debt they wanted to absorb.

Way forward for Air India

1)     Currently, Tata Sons will own 84% share in Air Asia (Market share: 5.2%) and 51% ownership in Vistara (Market share: 8.3%). Combined with Air India’s market share of 13.2%, Tata can have strong strategic position in India’s airline industry with 27% market share, second in position to Indigo

2)     Tata Group will further seek to implement few measures in the airline including debt refinancing, negotiating high-cost vendor contracts, refurbish old aircrafts and set up an able leadership team to give Air India a strategic pathway. Tata Group has brought in TCS as technology partner to remodel the technological capabilities.

3)     However, concerns are still looming with Air India staff with respect to salary arrears, salary cuts and staff accommodations. Now, it’s for us to see the Tata Group’s response to these apprehensions.

* The opinions expressed in the article are personal and do not represent the opinions of the organization I work for * 

 

Chip Shortage: A New challenge to the automotive industry

I

nitially, in the spring of 2020, when COVID-19 pandemic swept across Europe and US, leading automotive players like General Motors, Ford Motor and Volkswagen took immediate measures to halt the production lines to being in tune with the receding demand. Forecasting a possible slowdown, carmakers cancelled all the chip orders which are usually required for driver assistance and navigation control systems. With this, semiconductor producers assigned their vacant production capacities to cater to other end markets like smartphones, laptops and other appliances. With Work-from-home and Learn-from-home models of operation gaining momentum in pandemic, it was evident that demands for smartphones and laptops had gained significant steam. Gradually, automotive industry also observed a reset in demand slowdown with pent-up demand and began to send in their orders to the chipmakers. With a gloomy future laying ahead, buyers started to stockpile the chips with rising uncertainties caused by US-China technology tussle.

This has put tremendous stress on the manufacturing capabilities of the semiconductor companies who are now unable to cater to the sudden rise in demand. Wafer fabrication plants are fine-tuned and are running 24 hours a day for 7 days a week. Setting up additional production lines is not easy as it requires entire year to commence operations and billions of dollars’ worth of investment. Besides, significant disruptions to the supply chain, fire in chip factory in Japan and halting of production due to winter in Texas, United States has further aggravated the issues. Currently, vendors are quoting lead times as long as 32 weeks for the delivery of chips, as per Andrew Feldman, CEO of a chip startup named Cerebras Systems.

Leading automotive companies are attempting to perform some serious damage control in order to cater to the global car demand. General Motors are building light duty full-size pickup trucks without the fuel management module. It has further extended production cuts to its three North American plants. Elon Musk has also introduced alternative chips to Tesla’s production capabilities. It has also considered rewriting the vehicle’s software to accommodate the alternates. The chip shortage is expected to wipe off USD 2 billion from Ford Motor’s 2021 profits. To keep the business afloat, Ford is also launching flagship F-15 pickup truck and Edge SUVs with absence of certain parts. However, chip shortage has led to significant price gains in the global used car market, also recording purchases equal to the new cars.

In case of the chip manufacturers, there lies an uphill task for them as well as they look to remodel and restructure their manufacturing processes to this ballooning demand. Taiwan Semiconductor Manufacturing Company, Limited (TSMC), a major player involved in production of up to 80% of chips worldwide, has announced an investment of USD 2.87 billion to set up additional production lines at its fabrication plant in Nanjing, China. Furthermore, Intel also has decided to allocate resources, particularly for automobile segment, which it had remained distant from until now. It has investment pipeline of USD 3.5 billion to expand its wafer fab in New Mexico, along with array of funds channeled to its plants in Arizona, Oregon, Ireland and Israel.

However, in future, buyers need to optimize their supply chain and operational efficiencies in order to avert a similar mishap going forward. Essentially, companies need to leverage on digital solutions like Big data, artificial intelligence and machine learning for efficient demand forecasting and production scheduling. NXP Semiconductors, a European chip maker is now working directly with automotive part suppliers like Bosch in order to understand future demand scenario. Buyers and sellers need to set up digital platforms in order to collaborate for seamless exchange of data including production schedules, order pipeline, demand forecasts, supply-chain data and many more.

This chip shortage, expected to snowball in 2022 as well, is a harbinger for companies to reinvent their procurement and production models to evade such aftermath in future. Data, being one of the strongest tools at their disposal should be analyzed to predict better outcomes. 

* The opinions expressed in the article are personal and do not represent the opinions of the organization I work for * 

India’s COVID-19 Update – April 2021

1)     The arrival of second wave of COVID-19 in India was duly expected but the momentum with which the wave has ravaged the country is beyond contemplation. The daily infection numbers are harrowing with peak of second wave shooting up by at least 250% of the peak last observed in September 2020. India alone accounts for almost 10% of the total COVID-19 infections at global level.

2)     The Government of India has pulled up its socks announcing lockdowns and mobility restrictions across different states. Further, the eligibility criteria for vaccination drive was also expanded to accommodate people above 18 years of age. However, with the current shortage observed at different vaccination centers, it will be quite a remarkable feat if India manages to pull it off effortlessly.

3)     Currently, medical infrastructure in India is only equipped to inoculate only 3% of the country’s population. India is able to vaccinate only 3 million people daily, which comes to 0.2% of the Indian population. With this speed, it is nearly impossible to inoculate entire country by November as previously assured by the Government

4)     Indian healthcare structures are crippled with mounting cases and hospitals are widely reporting shortage of patient beds and oxygen cylinders. There is significant amount of news pouring in of companies beefing up their oxygen production. However, main issue lies in providing the required logistical support. In 2019, India’s oxygen requirement was 700 metric tons per day. This figure eventually spiked to 2,800 metric tons during first wave in 2020. The second wave reported further spike in demand to the tune of 5,500 metric tons per day. Furthermore, an oxygen tanker can carry only up to 15 tons of oxygen. About 3 hours each are required for filling the tankers and transferring them to hospital’s storage units, apart from 24-36 hours required in-transit. Therefore, it is imperative that more tankers are added to existing portfolio to strengthen the logistics and cater to overwhelming demand.

5)     The Government has connected internationally with governments in United Kingdom and Germany for procurement of oxygen cylinders. They are also attempting to fast-track the regulatory controls for procuring the international approved vaccines.

6)     As we approach the end of April, the state governments should to stay clear of lockdown-infused solutions and instead come up with more creative approaches to curb the spread of virus. Micro-containment zones, rapid testing and efficient frictionless vaccination delivery can gradually lead to the peaking infection rates into a nose-dive.

 * The opinions expressed in the article are personal and do not represent the opinions of the organization I work for * 

 

Unlocking India’s AI potential

 

The digital transformation has changed the way the business leaders look at company’s operations. With data being a strong back-bone of every decision made in corporate board-rooms, companies are striving towards achieving AI-powered data models to achieve the coveted strategic direction. Artificial Intelligence (AI), being a strong disruptive force in digital revolution, is a combination of technologies which are aimed to mimic highest level of human intelligence.  A study conducted by McKinsey showed that highest incorporation of AI was towards increasing revenues by optimizing inventory-management, pricing, promotions, demand forecasting and customer-service analytics. As a concept, artificial intelligence is not a modern-day concept. Greek, Chinese and Egyptians contemplated on inanimate objects coming to life as intelligent beings. However, the term ‘artificial intelligence’ was officially coined in 1956 during a conference at Dartmouth College in United States. The scientist John McCarthy opined that in future, human thinking abilities can be simulated by computer algorithms which like, human beings can learn based on their own experiences. This led to a revolutionary disruption as many technology companies and academic institutions across the globe invested their resources in building strong AI-powered programs. Eventually, AI started to feature in gaming, medical and research domains. Globally, there are several strides in field of AI with countries like China and United States channeling billions of dollars to fund research to sharpen their technological prowess.

To join this bandwagon, India’s think tank ‘NITI Aayog’ drafted a National AI strategy in 2018 to focus on unlocking opportunities in economy’s key focus areas. The panel has identified healthcare, agriculture, education and smart mobility to be key economic engines to remodel using latest AI tools. Having said that, implementation of AI programs can reach far beyond these sectors. With that, I will run through some sectors to highlight some potential opportunities for AI and developments achieved so far

Healthcare:

Healthcare in India is complex especially in rural and neglected corners of the country where the basic wellness facilities are denied due to a host of issues. India’s Ayushman Bharat initiative promises a healthcare insurance for secondary and tertiary hospitalization across wider coverage. There is strong opportunity to implement technology solutions to increase the healthcare coverage, by introducing digital medical records to be accessed remotely.  Deep machine learning algorithms can help in clear diagnosis and identify future outcome of diseases, leading to further prevention. Artificial intelligence, being what it is, can learn from the millions of patient case studies and sharpen its diagnostic abilities over time. In 2018, Microsoft and Apollo Hospitals had entered into a collaboration wherein Microsoft would provide the appropriate technological models to derive insights from Apollo’s patient data. As mentioned earlier, there is a strong shortage of medical professionals in rural areas and leveraging digital solutions can help in a robust disease management.

Agriculture:

Despite our strong efforts to move away from agri-based economy towards other industries, 60% of Indian population is involved in agriculture and allied activities. With this, every year, agricultural domain faces multiple issues including land degradation, deteriorating water tables, soil infertility and pest resistance. Hence, it is imperative to relook at this segment as a potential opportunity to bring in artificial intelligence and machine learning solutions.  Furthermore, startups are recommending robotics and drone-based solutions to analyze soil types and weather in order to run in under AI-ML models to derive actionable insights for the farmers. Use of technology can enable farmers better access to new farming techniques, insights, markets, appropriate credit and insurance. In 2019-20, Indian agri-based startups raised more than USD 1 billion through a total of 133 deals. An adequate support from the government can help more startups emerge within the ecosystem.

Education:

I have to admit that education is one of my personal favourites where I would love to see ground-breaking digital solutions for enhanced learning experience. Like major segments, majority of issues faced by India’s education landscape are focussed in rural areas. With an unavailability of adequate infrastructure, teachers are majorly faced with a heterogeneous group of students having variations in age and learning abilities. To add to this, Indian education system is heavily leaning on rote rather than on application. It is common knowledge that many students drop out due to unavailability of funds, poor educational infrastructure and unwillingness to learn. E-learning solutions have been an emerging trend in India but its reach in rural corners is questionable. AI may not completely replace teachers but it can be an enabler to manage a heterogenous group. The e-learning solutions equipped with strong statistical algorithms can help customize the learning and help student learn at their own comfortable pace. Statistics coupled with AI can also help predict outcomes for student drop-out rates, helping the e-learning solutions draft an alternative learning plan for students to follow. The AI-ML technology can also be used to create an interactive gamification experience for students to learn conceptually.

Smart Mobility:

Nowadays, India’s urban population needs smart mobility solutions to enable a convenient and faster transport mechanism. Transport is spine for India’s urban economic development and India needs strong solutions for an enhanced connectivity. Autonomous vehicles are something India is not ready for immediately. However, automotive companies can invest significantly in developing suite of autonomous technologies as a potential alternative for the future. These technologies, even though not implemented on immediate basis, can prove to be of an economic advantage to the country. Such technologies can act as a stage for further international partnerships with industry and academia. AI technology can also address the impending issues of traffic congestions and road fatalities by employing algorithms to divert the traffic in areas of heavy bottlenecking. Shared mobility being the new trend today can be an initiative for startups to come up with AI platforms which aid ride sharing and travelling in faster and cheaper manner

With the threat of coronavirus pandemic looming over businesses, it is essential for corporate and government to relook, remodel and restructure its digitalization initiatives. The Government has partnered with National e-Governance Division, Ministry of Electronics & IT and Intel India to roll-out a program for youth to act as a guiding force to develop an innovative tech mindset. The Union Ministry of Communication and Information Technology set the stage for young growth companies to showcase their AI-based platforms to the world. The challenge was termed as AI Solution Challenge, aimed for increasing the out-of-box thinking catering to key growth sectors of the economy. In October 2020, Telangana government locked synergies with International Institute of Information Technology, Hyderabad (IIIT-H), the Public Health Foundation of India (PHFI) and Intel India to launch Applied AI research center to develop AI-based use cases to solve population-scale issues. These are handful of initiatives which the government has brought to table to foster growth and collaboration in field of AI.

However, despite the throttle, there are several obstacles on the journey to a holistic AI implementation across target segments. Currently, there are handful of institutes which are specialist in developing AI platform. The Government needs to identify the potential academic institutions and energize them with appropriate funding, partnerships and degrees of freedom to experiment on AI algorithms. Also, for a successful deployment of AI across sectors, we need a robust database of raw data. Currently, data collection mechanism in our country is extremely poor and the Government needs to take proper steps to enable robust aggregation of live data. That said, even if we have to assume a smooth implementation, the fear of unknown is expected to persist with AI expected to take over several employment opportunities. Eventually, this will definitely demand the employees to upgrade their skillsets and capabilities. 

Ultimately, it’s just the question of are we ready yet?

 

 

 * The opinions expressed in the article are personal and do not represent the opinions of the organization I work for * 

The Hottest Trend in the Financial Systems : Special Purpose Acquisition Company

One of the hottest trends on the financial markets is formation of a special purpose acquisition company (SPAC). Companies wanting to undergo listing may choose to divert from the traditional IPO route and associate themselves with the SPACs. But what are these SPACs and how do they function?

1)     Essentially, SPAC is a shell company, established with a sole objective to raise funds from the retail investors through an IPO, only to make an acquisition into the future. Thus, a SPAC is sponsored by institutional investors, private equity, hedge funds, CEOs and high net-worth individuals

2)     The private companies chose SPAC route for listing since the process ensures access to faster liquidity which otherwise may be denied. Besides IPO takes 1-2 years to complete. SPAC offers faster listing with process completion in approximately 5-6 months.

3)      As per data from Dealogic, the US SPAC IPOs have grown exponential from USD 13.2 billion in 2016 to USD 34.6 billion in 2020, registering a CAGR of 26.8%. Especially in the times of COVID, with a heightened need for faster liquidity, year 2020 has shown a rapid surge of 182% Y-O-Y in SPAC deals.

4)     This trend is slowly moving towards European markets as many US SPACs are focusing on acquiring potential targets in the region. This paves way for private companies with attractive valuations which are now looking to list themselves on the US stock exchanges.

5)     Furthermore, a red ocean is bubbling in the US markets with SPACs fighting hard to get to these lucrative deals. This has led to some newly formed SPACs to look beyond national frontiers into the niche markets. The Asia Pacific region is also emerging as a hot bed for SPACs with USD 2.4 billion raised in 2020 as against USD 613 million in 2019.

6)     However, there is a rising concern amongst the investor lobby that this bubble will eventually burst in the future. One of evident red flags is the fact that the SPACs need to hunt their potential targets within 24 months, failing to do so, will result in entire investment being returned to investors with interest. With deadlines approaching, SPACs may compromise over quality targets and simply acquire unfavored companies to avoid liquidation. Another measure cause of worry is that SPACs do not have a robust business plan conveying their way forward, resulting in strong ambiguity amongst the investors.

In my opinion, with too many investors fighting for a limited share of pie, it is clear that there will be a correction in the future. It is just the question of when. 

My most-recommended reads for 2020

 

The year 2020 presented us with a complete turnaround in the way we conduct our daily routines. COVID-19 pandemic slapped limitations and confined us inside our houses for extended periods of the day. It also paved way for many learning opportunities and since I saved significant time on my commute to work, I got a chance to revisit my old hobby with a full throttle – reading. With this, I have decided to enlist my 5 most-recommended reads of 2020. Over the course of time, I will try my best to build up this list further.

So here are my top 5 reading picks for the year 2020

1)     Surrender experiment (by Micheal Singer): When majority of the people stand by ‘hard-work’ as the only success mantra, former software programmer and a founder of mediation institute, Michael Singer devised an experiment which was a complete opposite to the hard-work theory. Named after the title of the book, Surrender experiment is an act of complete submission to the forces of universe and a corresponding faith that these forces will help manifest one’s desires. Formerly a hippie and drug addict in his teens, Micheal Singer brought a complete metamorphosis to his life by taking to intense meditation practices and getting into frequent flow states. This book will initiate the readers to act of surrender and spiritual practices which can lead to fulfilment of one’s goals. 

2)     Sapiens (by Yuval Noah Harari): Amongst my highly recommended list, this book deserves multiple reads. Yuval Noah Harari’s Sapiens helps the reader discover the ancient roots of human evolution. It is not a factual book reiterating the previously discovered theories of biologist and anthropologists. Instead, it challenges the facts we think we know about being human. This book will surely tickle the curiosity of the readers covering a wide spectrum of topics including the development of human cognition, agricultural revolution, advent of money, emergence of religions, inception of war and much more.

3)     Business Sutra (by Devdutt Pattanaik): Being the former Chief Belief Officer at Future Group, Devdutt Pattanaik has a tremendous knack of weaving lessons learned from the mythological stories into business management. Picked up as a subject in Indian School of Business, Business Sutra is strong reminder of the fact that management is deep-rooted in Indian mythology. Indian style of doing business is empathetic and largely focusses on employee satisfaction rather than increasing the shareholder value. This book narrates short stories from Indian mythology and applies these first-principles to the modern-day corporate

4)     The Buddha and the Badass (by Vishen Lakhiani): Vishen Lakhiani, the founder of the famous personal development company – Mindvalley, had written this book with an objective to introduce spirituality to boost performance at workplace. As the title suggests, Buddha is a person who navigates through his environment with fluidity, nailing complex projects with a smile on his face whereas the Baddas is the modern-day innovator and disruptor who breaks new normal ever single day. The book sets up the codified actionable steps which can help the reader merge his own Buddha and the Badass to grow at the workplace. 

5)     The Power of your subconscious mind (by Dr. Joseph Murphy): To be honest, this was not the first time I have picked up this book. In fact, I had read it multiple times before and honestly, I have even lost the count. This book is one of the most underrated and my personal favorite when it comes to touching upon the concept of ‘Law of Attraction’. This book conveys the mechanics of the human mind and how one can tap into the infinite potential of the subconscious mind to access abundance. Backed up by strong research, this book explains how our current life events are shaped out of our own mental structures and how we can use tried-and-tested methods to alter the reality around us.